NEW DELHI, March 31 (Reuters) – Indian police extended a curfew to several areas of the IT city of Hyderabad on Wednesday after four days of religious clashes between Hindus and Muslims left two dead and scores injured.

The religious strife has heightened tension and worried authorities in the southern city of Andhra Pradesh state, which houses major operations of such companies as Microsoft, Google and Mahindra Satyam.

Here are some questions and answers about the latest crisis and whether it can hurt business.

WHAT ARE THE CLASHES ABOUT IN HYDERABAD?

Clashes started after a Hindu group replaced Muslim flags with Hindu ones on streets during a festival, triggering clashes with Muslims. Nearly 125 people have been arrested so far.

The once princely dominion in Hyderabad has a history of religious tension with Hindu groups taking on Muslims over festivals and respective customs to gain supremacy.

Political leaders from both communities have also ignited communal clashes in the past, hoping to win support of voters from their respective communities, experts say.

A bomb blast in May 2007, and recent protests over the carving of a new state called Telangana in Andhra Pradesh, are examples of how violence has often hit the city.

WHAT IS BEHIND THE RELIGIOUS FLARE UP?

Old tensions may have played a part, especially at the beginning with spontaneous responses from both Hindu and Muslim groups, who came out of their homes with rods and sticks.

Local media also said police high-handedness was a provocation, while in other areas police were reported to have reacted slowly, and allowed rioting from both sides to grow.

The city police chief said the riots were premeditated without saying who was responsible.

Some politicians from Hyderabad city and coastal Rayalseema region, who do not want the formation of Telangana, may be behind the riots, pro-Telangana leaders say.

WHAT BUSINESSES HAVE BEEN HIT BY THE CLASH?

Operations in high tech companies in the IT hub of Cyberabad, about 20 km (12 miles) away from the main city of Hyderabad, remain unaffected with a large police presence keeping rioters at bay.

But a wholesale food grains market and a popular garment trade business has been hit inside Hyderabad, where a curfew has been imposed. Trade bodies say they are incurring losses worth more than $65 million a day.

WHAT COULD HAPPEN?

Regular violence in Hyderabad could make the city a less attractive destination for multinational firms and communal clashes might heighten tension, also worrying investors, experts say.

Instability could affect business soon and the present clashes could spiral out of control if political parties fail to come together on issues such as Telangana. (Editing by Alistair Scrutton and Jerry Norton)

NEW DELHI, March 30 (Reuters) – India said it is trying to trace the whereabouts of nearly 100 sailors on seven Indian vessels taken captive by Somali pirates off the African coast.

"The sailors in small trade boats, known as dhows, have been taken captive over the past few days and we are trying to find more about their fate," Captain M.M. Saggi, a shipping official, told Reuters from Mumbai.

"We are trying to contact all the owners of the missing vessels and find more about their identity," Saggi added.

According to initial information, the Indian vessels, mostly from the western state of Gujarat, were on their way to the United Arab Emirates from Somalia, when they were attacked by the pirates, who seized the boats.

Crew members of an Indian vessel, released by Somali pirates this week, told authorities on Tuesday that several vessels with Indian sailors had been hijacked by pirates in the last few days, India’s navy said.

"Since this is a potential hostage situation, we are not taking any chances. We are very closely monitoring the situation," said Commander P.V.S. Satish, an Indian Navy official.

India’s Navy has a warship stationed near the Gulf of Aden and it has thwarted dozens of hijacking attempts and escorted vessels passing through the region regularly.

Somali pirates regularly attack Indian vessels and this month Indian navy commandos thwarted a suspected pirate attack on a Greek bulk carrier off the Indian coast.

Somali pirates are seizing ships as far as the Mozambique Channel and off the coast of India, a senior U.S. admiral said last week.

The pirates have stepped up attacks in recent months, making tens of millions of dollars in ransom from seizing ships in the Indian Ocean and Gulf of Aden. (Editing by Alistair Scrutton and Jerry Norton)

NEW DELHI, March 26 (Reuters) – Indian security forces are reclaiming territory from Maoist rebels for the first time in the decades-long insurgency, capitalising on better intelligence and pressure by troops, a senior official said on Friday.

The Maoists, described by Prime Minister Manmohan Singh as the country’s biggest internal security threat, started their armed struggle in West Bengal’s Naxalbari town in 1967, and have expanded their support among farmers by tapping into resentment at the government’s pro-industry push.

They have spread into rural pockets in 20 of India’s 28 states and the movement has hurt business potentially worth billions of dollars in mining industries in central and eastern India.

But the government says it has taken back the momentum ever since it launched an offensive against the rebels late last year, reclaiming some areas in the mineral-rich states of Orissa and Jharkhand and neighbouring Bihar and West Bengal.

"We are getting ground level intelligence from within the Maoist cadres for the first time," U.K. Bansal, India’s internal security chief, told Reuters in an interview.

Bansal, the government’s special secretary for internal security, said troops were getting information from villagers and some rebels about the location of their comrades and their plans.

"There are fissures within the organisation which are helping us penetrate and reclaim territories," Bansal said.

The rebels carried out more than 1,000 attacks last year, killing more than 600 people, and disrupted movement of coal and bauxite in eastern and central India worth millions of dollars.

They also extorted about $307 million from companies in east and central India last year, home ministry officials say.

But Bansal said troops have scored successes with dozens of rebels captured and forces reclaiming rebel strongholds.

Indian police killed four rebels on Friday, including a senior rebel commander in a gun battle in the eastern state of West Bengal and reclaimed several villages held by the rebels.

"In Orissa state there have been a lot of surrenders in the last few months, we are slowly making headway everywhere," Bansal said.

At least 100 Maoist rebels have surrendered or been arrested in the past six months from various parts of the country, home ministry officials say.

Facing pressure from central troops, the rebels offered a 72-day ceasefire last month, a proposal dismissed by the government as a ruse to regroup.

Bansal however said it would be a long battle to completely overpower the Maoists as the rebels had modern firepower at their disposal, mainly looted from police armouries.

Last month, the rebels killed 35 people in back-to-back attacks in two eastern Indian states, including a daylight attack on a police camp that raised a storm of criticism over India’s ability to tackle the threat.

About 8,000-10,000 Maoist fighters are still not involved in actual gun battles with troops, officials have said.

"We have just started to make inroads, it will take a long time as we are talking about 20,000 (Maoist) fighters here," Bansal added. (Editing by Matthias Williams)

NEW DELHI (Reuters) – India is building a legal case for access to a Chicago man who pleaded guilty to helping plan the 2008 Mumbai attacks, official said Thursday, after confusing U.S. signals on whether Indian police could quiz him.

New Delhi says it could get more information on militant networks targeting India if it was allowed to interrogate David Headley, who admitted in a U.S. court last week that he scouted targets for the attacks, which killed 166 people.

NEW DELHI, March 15 (Reuters) – A bombing that killed 16 people in western India last month was carried out by home-grown Islamists with links to militants in Pakistan, a top Indian security official said on Monday.

The bombing came days before an important official dialogue between India and Pakistan and was the first major attack in India since the 2008 Mumbai raid by Pakistan-based Lashkar-e-Taiba militants who killed 166 people.

"All the evidence which is coming currently is showing that it is the IM (Indian Mujahideen), rather than a Hindu militant group involved in the Pune blast," Gopal Pillai, India’s Home Secretary, told Reuters in an interview.

It was the first time a senior government official has blamed a particular group for the bombing. Pillai is the top civil servant in the interior ministry.

Indian Home Minister Palaniappan Chidamabaram promised last week a swift and decisive response if any militant attacks on Indian soil were found to have been planned and executed from Pakistan.

The Indian Mujahideen (IM), an offshoot of the banned Students’ Islamic Movement of India (SIMI), first emerged in 2007 and 2008 when it claimed responsibility for a wave of bomb attacks in major Indian cities.

Pillai said IM operatives are being trained in Pakistan and have links with Lashkar-e-Taiba, one of the largest Pakistan-based militant groups, also blamed for the Mumbai attacks.

"The handlers are the same, the set of handlers which was involved in Mumbai," Pillai said, referring to the weekend arrest of two suspected IM operatives in Mumbai, who were believed to be planning bomb attacks, including in the offices of energy firm Oil and Natural Gas Corp <ONGC.BO>.

He said the growing power of LeT was a big threat to peace in the region and said the militant group was spreading its tentacles beyond India and Pakistan.

Security experts say the LeT is now focusing on foreigners as targets and is fast emerging as an alternative to al Qaeda as a powerful militant group with a global presence.

"At least in the Middle East we find people (LeT militants). In Dubai, in Sharjah, in Saudi Arabia, the tentacles are there of the LeT," Pillai said.

He said the LeT had even spread to Hong Kong and into Singapore.

Pillai said the reason there has not been a repetition of an attack like Mumbai was 25 percent due to geopolitics and Pakistan holding back, perhaps fearing Indian retaliation, and 75 percent due to the busting of at least 14 IM cells since 2008.

"There are several modules still there … Our real fear is something they are doing now for something in 2011 or 2012. We do not know who is doing it," Pillai added. (Editing by Krittivas Mukherjee and Jon Hemming)

NEW DELHI (Reuters) – India will have to scale up prevention of HIV to avoid having to spend an increasing share of its health budget on treatment of AIDS patients, the World Bank and other agencies said Sunday.

New Delhi spends about 5 percent of its $5.4 billion healthcare budget on treating AIDS patients.

POKHRAN, India (Reuters) – Indian fighter jets pounded mock enemy bunkers close to the Pakistan border on Sunday in a show of air power at a time when the two nuclear-armed rivals are trying to improve relations.

The exercise was watched by military attaches from about 30 countries but not Pakistan and China, neighbors who would be keen to take a look at India’s military firepower.

POKHRAN, India, Feb 28 (Reuters) – Indian fighter jets pounded mock enemy bunkers close to the Pakistan border on Sunday in a symbolic show of air power at a time when the two nuclear-armed rivals are trying to improve relations.

The exercise was watched by military attaches from about 30 countries but not Pakistan and China, neighbours who would be keen to take a look at India’s military firepower.

It follows the first official talks between India and Pakistan since the militant attacks in Mumbai in 2008.

The talks ended with an agreement to keep in touch, signalling relations remain fraught despite a desire to reopen a dialogue that India suspended after the Mumbai killings.

"This is not just a firepower demonstration but a clear message about what India’s air force is capable of," said Uday Bhaskar, a New Delhi-based strategic affairs expert. "It is a message to the neighbours."

Tensions between India and Pakistan are a problem by themselves but the stakes have risen further with their roles in the war in Afghanistan.

In Sunday’s war games, planes including Sukhois and MiG 21s, roared through the sky, bombing simulated enemy targets including militant training camps and bunkers.

President Pratibha Patil and Defence Minister A.K. Antony watched as targets were hit with bombs and rockets, raising huge balls of fire and dust in the deserts of Pokhran, the site of India’s nuclear testing facility.

Defence officials said the exercise would test the air force’s ability at precision bombing of militant camps, particularly those behind enemy lines.

India accuses Pakistan of letting militant groups use its territory to train and launch attacks on India, such as the Mumbai raid that killed 166 people. (Writing by Krittivas Mukherjee; Editing by Angus MacSwan)

NEW DELHI, Feb 25 (Reuters) – The first official talks between India and Pakistan since the 2008 Mumbai attacks ended on Thursday with only an agreement to "keep in touch", signalling that relations between the nuclear-armed rivals remain frosty.

The meeting also marks a tiny step in improving the outlook for stability in Afghanistan, where India and Pakistan have long battled for influence, complicating regional security, but many obstacles remain.

The two nations’ top diplomats met in a former princely palace in a heavily guarded New Delhi neighbourhood and agreed to "remain in touch" to build trust with each other.

"We went into today’s talks with an open mind but fully conscious of the limitations imposed by the large trust deficit between the two countries," Indian Foreign Secretary Nirupama Rao said after talks with her Pakistani counterpart, Salman Bashir.

"In line with our graduated and step by step approach, our aims were modest."

Neither diplomat said if there would be a next round of talks, though the prime ministers of the two countries have an opportunity to meet at a regional summit in Bhutan in April.

Rao, wearing a black and red sari, and Bashir, in a dark suit, shook hands in front of the cameras before walking into a sprawling room for discussions.

The two countries did not appear to agree on which subjects should be covered in the talks; India wanted to focus on terrorism while Pakistan eyed the disputed Himalayan region of Kashmir that has been the cause of two of their three wars.

"We don’t like to be sermoned on the issue of terrorism; we know what it means," Bashir said, adding 5,366 Pakistani civilians had been killed in militant attacks since 2008.

"From Pakistan’s perspective the core issue that has troubled Pakistan-India relations is the issue of Jammu and Kashmir…and any effort to be dismissive of this issue will not be healthy."

Kashmir, which India and Pakistan claim in full but rule in part, remains at the heart of their dispute. India accuses Pakistan of abetting a 20-year revolt in Indian Kashmir. Pakistan says it only gives moral support.

EVIDENCE HANDED OVER

Bashir also criticised India’s role in Afghanistan, saying the country was being used to supply weapons and funds to militants to destabilise Pakistan. New Delhi denies this.

India broke off talks after the Mumbai attacks, saying dialogue could resume only if Pakistan acted against militants on its soil. It blamed the attacks, which killed 166 people and derailed a four-year-long peace process, on Pakistan-based militants.

India handed three new dossiers of evidence to the Pakistani delegation on Thursday, including one on Hafiz Saeed, the rabble-rousing head of the Lashkar-e-Taiba militant group blamed for the Mumbai killings.

Bashir said he would look into the fresh dossiers, but dismissed earlier evidence India supplied against Saeed as more "literature than evidence".

Re-engaging Pakistan was a politically fraught move for New Delhi, given strong Indian public opinion against talks, but a nudge from Washington and dwindling diplomatic options saw India reaching out.

Expectations from the talks were modest.

"Nothing has come out of these talks, nothing was suppose to come out," political columnist Cho Ramaswamy said.

"Whether there is going to be another round of talks depends on the amount of friendly pressure Americans put on both sides."

The talks in New Delhi come amid a foreboding sense in India that the bombing of a popular bakery in the western city of Pune this month, which killed at least 16 people, may herald more attacks.

A second attack like Mumbai could shake what has so far proved to be a resilient Indian economy. (Additional reporting by Robert Birsel in ISLAMABAD; Writing by Krittivas Mukherjee; Editing by Alistair Scrutton)

NEW DELHI, Feb 23 (Reuters) – Indian Maoists have offered a 72-day ceasefire if New Delhi calls off an offensive against them, media reports said on Tuesday, but the government said it would wait for a formal offer before it responded.

Top rebel military commander Koteshwar Rao, also known as Kishenji, made the offer through a statement to Indian TV and newspaper offices late on Monday, saying the ceasefire could hold from Feb. 25 to May 7.

But the government said "in the absence of an authentic statement" it was unable to respond immediately, raising doubts the Maoist truce offer would pave the way for peace talks to end decades of insurgency.

Home Minister Palaniappan Chidambaram said in a statement that talks could be possible if the rebels gave up violence, a demand the Maoists have so far refused.

"I would like no ifs, no buts and no conditions," Chidambaram said. "Once I receive the (truce offer) statement, I shall consult the prime minister … and respond promptly."

The rebels carried out more than 1,000 attacks last year in the countryside and some bigger rural towns, killing more than 600 people and disrupting movement of coal and bauxite in mineral-rich eastern and central India.

The Maoist truce offer comes a week after the rebels killed 35 people in back-to-back attacks in two eastern Indian states, including a daylight attack on a police camp that raised a storm of criticism over India’s ability to tackle the threat.

The rebels, whose numbers are believed to be between 22,000 and 25,000, have also been under pressure from a massive, coordinated government security offensive and many believe the truce offer is a ruse to regroup.

Some analysts also point out that the truce offer covers the months when trees shed their leaves making it difficult for the rebels to move around their jungle hideouts.

"We are for the first time carrying out a coordinated movement against them. Yes, they might have had some success through their hit-and-run tactics, but the heat is on them," a senior internal security official told Reuters on Monday.

The Maoists say they are fighting for the rights of poor peasants and landless labourers, and blame the federal government for doing little for the welfare of poor tribals.

The rebels feed off the resentment of millions of poor people who have not shared the benefits of the boom in India’s economy, which, after the global slowdown, looks set to climb back to more than 8 percent growth in the next fiscal year.

They control a narrow corridor of forested, mineral-rich belt stretching over 22 of India’s 28 states. But their influence remains largely restricted to the countryside and small towns. (Editing by Matthias Williams and Krittivas Mukherjee)